16.5.17

Modi Sarkar: 3 years on....

As the Modi government enters the fourth year of its term, its economic report card looks good. The government has many achievements to its credit. In 2013, the economy was in a bad shape: growth had slumped to below 6 percent, rupee crashed to 68.85 to the dollar on August 28, 2013 following the QE taper announcement, the twin deficit problem – high fiscal and current account deficits - rendered Indian economy highly vulnerable and inflation was raging above 10 percent.

Foreign institutional investors put India in the ‘fragile five’ group BIITS (Brazil, India, Indonesia, Turkey and South Africa) and sold heavily, impacting the currency and stock markets.

Further, policy paralysis in the last phase of the UPA government had impacted business confidence and economic growth.

As the Modi government enters the fourth year, the economy is in a much better shape. In the emerging markets, India is in a macro sweet spot. Indian GDP growth in 2017-18 estimated to rise to 7.4 percent is likely to be the highest among large economies in the world.

The IMF last year referred to India as the ‘bright spot in the gloomy global economy’. Thanks to the fiscal consolidation in successive budgets, the fiscal deficit has been brought down to 3.2 percent. Current account deficit at 1 percent is not an issue at all.

The rupee has strengthened to around 64.40 to the dollar. In the last 3 years retail inflation averaged 5.2 percent. Presently, the CPI inflation is below 3 percent. Exports, after three years of lackluster performance, have started picking up and India has emerged as one of the largest recipients of FDI in the world.

The stock market is at record highs and investors, both foreign and domestic, are pouring money into the market. This transition from “fragile five to fabulous few” is an impressive track record.

The economy has quickly recovered from demonetization and now remonetization is contributing substantially to economic growth. On the infrastructure front, road and power sectors can boast of impressive gains. GST is going to be a reality.

Real Estate Regulation Act is a major reform, which will have far-reaching benign economic consequences. While appreciating these achievements, we should also be concerned about the lapses.

It is important to note that private investment is yet to pick up and the banking system is reeling under the heavy burden of stressed assets. Even though the government can claim that the high NPA is a legacy issue, the reality is that it is chocking growth in the economy.

The recent ordinance amending the Banking Regulation Act empowering the RBI is, of course, a bold initiate to address the NPA problem.

A major negative in the Modi government’s report card is that it has nothing to show on the employment front. The ‘Make in India’ initiative and jobs generation have miles to go.

The present global environment is favorable. Global trade is picking up. In India, interest rates are trending down and investment can be expected to pick up soon....

No comments:

MONEY MUSINGZ

MONEY MUSINGZ

Lok Sabha Polls 2019

Search This Blog

Twenty22

Twenty22 stands for the year 2022 when India will be 75 years old.The story of a young and energetic nation on the move,having her foundation in an ancient civilisation.From a glorious past to a glorious future.Our flag's Orange colour symbolizes courage and sacrifice, White stands for peace and truth, Green is for faith and chivalry and Blue represents the color of the sky and the ocean. The central motif is a Chakra, or Buddhist spinning wheel. The 24 spokes of the wheel correspond with the 24 hours of the day, implying that there is life in movement and death in stagnation.

A Scrapbook chronicling the magic of the present moment as the Winds of Change sweeps across INDIA,BHARAT,HINDUSTAN-The World's Largest Democracy.The Making of India which hopefully will have heartwarming stories of growth and development... on the lines of Chicken Soup for the Soul..ooops..err Rasam for the Hindustani Aatma. Jai Hind.

Disclaimer:Most of the information has been obtained by reading various newspapers / magazines , watching television and browsing through various websites.Pictures and Articles used are for informative and illustrative purposes only and their copyright belongs to their respective owners.Some of the popular sources of information are:The Times of India,Indian Express,Hindustan Times,DNA,Mint,The Economic Times,Financial Express,Business Standard,Hindu Business Line,Business World,NDTV,Times Now,CNN IBN,CNBC TV18,Aaj Tak,Zee News...